Economics of Global Warming

Paul Georgia discusses the costs and benefits of the Kyoto Protocol to address global warming.

the worldwide cost of implementing the Kyoto Protocol would be about $350 billion per year beginning in 2010. Beginning in 2050, the cost rises to $900 billion per year. The cost of predicted global warming, if climate models are to be believed, would be about $900 billion in 2100. But even if fully implemented, Kyoto would only delay the predicted amount of warming by a mere six years.

So what does this mean? It means that the world will spend thousands of billions of dollars over the next 100 years to prevent global warming, at the end of which it would have to pay the costs of global warming anyway, if it materializes. Kyoto is like trading dollars for pennies and would have about as much affect on the climate.

He cites Bjorn Lomborg, who in turn cites economist William Nordhaus for these estimates. The main economic arguments against Kyoto are:

1. The climate models that ecologists use actually have a rather low response of temperature to carbon dioxide, so that it takes a large reduction in carbon dioxide to prevent global warming scenarios. This factor raises the ratio of costs to benefits.
2. GDP will be much higher 100 years from now, when we foresee global warming's effects appearing. Therefore, relative to GDP, the cost of dealing with global warming in the future is much lower than preventing it today.

Discussion Question. What do you think of the point of view that future generations will be wealthier than today's, and so they should pay a higher share of overall environmental costs?